Correlation Between Datamatics Global and Generic Engineering

Can any of the company-specific risk be diversified away by investing in both Datamatics Global and Generic Engineering at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Datamatics Global and Generic Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Datamatics Global Services and Generic Engineering Construction, you can compare the effects of market volatilities on Datamatics Global and Generic Engineering and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Datamatics Global with a short position of Generic Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datamatics Global and Generic Engineering.

Diversification Opportunities for Datamatics Global and Generic Engineering

0.66

Correlation Coefficient

Datamatics Global  Generic Engineering

Poor diversification

The 3 months correlation between Datamatics and Generic is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Datamatics Global Services and Generic Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generic Engineering and Datamatics Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Datamatics Global Services are associated (or correlated) with Generic Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generic Engineering has no effect on the direction of Datamatics Global i.e., Datamatics Global and Generic Engineering go up and down completely randomly.

Pair Corralation between Datamatics Global and Generic Engineering

Assuming the 90 days trading horizon Datamatics Global Services is expected to generate 1.03 times more return on investment than Generic Engineering. However, Datamatics Global is 1.03 times more volatile than Generic Engineering Construction. It trades about 0.06 of its potential returns per unit of risk. Generic Engineering Construction is currently generating about -0.02 per unit of risk. If you would invest  30,066  in Datamatics Global Services on October 15, 2024 and sell it today you would earn a total of  34,569  from holding Datamatics Global Services or generate 114.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Datamatics Global Services  vs.  Generic Engineering Constructi

Datamatics Global

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Datamatics Global Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward indicators, Datamatics Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Generic Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generic Engineering Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Datamatics Global and Generic Engineering

The main advantage of trading using opposite Datamatics Global and Generic Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datamatics Global position performs unexpectedly, Generic Engineering can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Generic Engineering will offset losses from the drop in Generic Engineering's long position.

The idea behind Datamatics Global Services and Generic Engineering Construction pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.